Investors hang up on British chip designer behind iPhone graphics over dimmer
outlook

Imagination Technologies called on investors to back it over the long-term it predicted smartphone sales would be worse than expected this year.

The FTSE 250 chip designer’s shares took a battering, however, and were down by as much as 20pc, to their lowest level since late 2009.

Imagination cut its projection for annual sales in its core smartphone microchip business from 650 million units to between 580 and 630 million.

Sir Hossein Yassaie, the company’s chief executive, dismissed the slip as “absolutely a short-term thing” and blamed it on one-off events in the industry. They included the decision by Imagination customers such as Texas Instruments to pull out of the highly competitive smartphone sector and a slowdown in the growth rate of the market.

He said: “Our long term vision remains very much on course. If you look under the hood of our business it take three years for us to develop technology, and two years for manufacturers to build it, so we’re six years away from some products coming to market.

Related Articles

“The [stock] market has different parameters but frankly if we keep doing things right we’re confident.”

Imagination’s biggest business is designing graphics processor for smartphones and it has around a 50pc share of the global market. Analysts have recently raised concerns over the threat from ARM, which has a similar business model and has diversified from main processors to graphics processors, winning some major deals recently.

Sir Hossein said his main competitor remained the American giant Qualcomm, which builds graphics chips as well as designing them, but admitted ARM’s recent deal with the Taiwanese chipmaker Mediatek had weighed on Imagination’s outlook.

The company reported first half pre-tax profit of £2.2m, down from £10.7m. The drop reflected costs related to the acquisition of the American chip designer MIPS and poor-performing investments. Revenues were up 19.4pc to £85.2m.

Sir Hossein said long-term growth would come from Imagination’s venture onto ARM’s main processor territory via MIPS, and from new graphics technology that makes the type of sophisticated lighting effects possible on games consoles and smartphones.